8

Distribution Channels and Global Markets

PowerPoint Presentation by Ian Anderson, Algonquin College

Chapter 8

Copyright 2010 by Nelson Education Limited.

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Looking Ahead
After studying this chapter, you should be able to: 1. Explain the role of distribution in marketing. 2. Describe the major considerations in structuring a distribution system. 3. Discuss global marketing. 4. Describe the initial steps of a global marketing effort. 5. Identify sources of trade and financing assistance.

Chapter 8

Copyright 2010 by Nelson Education Limited.

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The Role of Distribution Activities in Marketing Distribution

 Physically moving products and establishing intermediary relationships to support such movement.

Physical Distribution (Logistics)

 The activities of distribution involved in the physical relocation of products.

Channel of Distribution
 The system of intermediaries (business relationships) established to guide the movement of a product.
continued
Chapter 8 Copyright 2010 by Nelson Education Limited.

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The Role of Distribution Activities in Marketing Functions of Intermediaries

Perform the marketing function better. Provide efficient distribution of the product.
 Breaking bulk sell to customers in smaller quantities.  Assorting bringing together similar lines of goods.

Shifting risks.
 Merchant middlemen - take title to the goods distributed.  Agents/brokers - distribute goods only.
continued
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The Role of Distribution Activities in Marketing Types of Distribution Channels

Direct channel
A distribution system without intermediaries

Indirect channel
A distribution system with one or more intermediaries.

Dual distribution
A distribution system with more than one channel.

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Copyright 2010 by Nelson Education Limited.

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Alternative Channels of Distribution

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Copyright 2010 by Nelson Education Limited.

Exhibit 8-1 8-6

Structuring a Distribution Channel Important Factors in Building a Distribution Channel

Costs associated with establishing a direct channel distribution Coverage is increased through the use of indirect channels of distribution. Control is enhanced using a direct distribution channel.
Chapter 8 Copyright 2010 by Nelson Education Limited.

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Determining the Scope of Physical Distribution Transportationwhich mode to use?

Common carriers
Transportation intermediaries available for hire to the general public.

Contract carriers
Transportation intermediaries that contract with individual shippers.

Private carriers
Lines of transport owned by shippers.
Chapter 8 Copyright 2010 by Nelson Education Limited.

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Determining the Scope of Physical Distribution Storage

 Lack of storage space is a common problem.

Materials Handling
 Protecting the firms output during warehousing .

Specifying Responsibility for Delivery Terms

 Paying freight costs.  Selecting the carriers.  Bearing the risk of damage .  Selecting the modes of transport.
Chapter 8 Copyright 2010 by Nelson Education Limited.

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Small Businesses as Global Enterprises Globalization

 The expansion of international business, promoted by converging market preferences, falling trade barriers, and the integration of national economies.
Size does not limit a firms international activity, and small companies often become global competitors to take advantage of their unique resources.

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Copyright 2010 by Nelson Education Limited.

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Emerging Global Markets

Exhibit 8-2
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Before Going Global

Decide if firm is up to the task of globalization.
Firms need to obtain adequate, initial exporting knowledge

Study the different cultural, political and business practices in foreign markets.
Identify viable sales prospects abroad Understand business protocols

Be prepared to modify products to meet design specifications that may vary from country to country.
Select suitable target markets abroad
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Questions to Consider Before Going Global

Chapter 8

Copyright 2010 by Nelson Education Limited.

Exhibit 8-4 8-13

Preparations for Global Marketing Researching a Foreign Market

Secondary sources of information
 Department of Foreign Affairs (DFAIT)  Canadian Commercial Corporation (CCC)  Canadian International Development Agency (CIDA)  Statistics Canada  Business Development Bank  Export Development Canada  Canadian Trade Commissioner
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Export Services of the Department of Foreign Affairs and International Trade

Export Information Kit Export Counselling World Information Network for Exporters (WINS) International Trade Data Bank Overseas Trade Fairs Trade Leads and Trade Missions Internet Resources

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Assistance for Global Enterprises Connections With International Customers

Trade Leads Trade Missions Trade Intermediaries
Export management companies Export trading companies Export agents, merchants, or remarketers Piggyback marketers
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Risk Levels and Levels of Involvement

Exhibit 8-5
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Strategy Options for Global Firms Foreign Licensing

 Allowing a company in another country to purchase the right to manufacture and sell a companys products in international markets  Licensee
The company buying the licensing rights

 Licensor
The company selling the licensing rights

 Royalties
Fees paid by the licensee to the licensor for each unit produced under a licensing contract
Chapter 8 Copyright 2010 by Nelson Education Limited.

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Challenges to Global Business

Political Risk
 The potential for political forces in a country to negatively affect the performance of businesses operating within

Economic Risk
 The probability that a government will mismanage its economy and thereby change the business environment in ways that hinder the performance of firms operating there.
Exchange ratesthe value of one countrys currency relative to that of another country.
Chapter 8 Copyright 2010 by Nelson Education Limited.

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Sources of Trade and Financing Assistance Financing and Information

Factoring Houses Export Development Canada (EDC) FITT (Forum for International Trade Training) Private banks
Letters of creditan agreement issued by a bank to honour a draft or other demand for payment when specified conditions are met. Bill of landinga document indicating that a product has been shipped and the title to that product has been transferred

Chapter 8

Copyright 2010 by Nelson Education Limited.

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